Trade, Economic Vulnerability, Resilience and the Implications of Climate Change in Small Island and Littoral Developing Economies
by Robert Read
Trade-Supported Strategies for Sustainable Development Series • Issue Paper 12
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Trade, Economic Vulnerability, Resilience and the Implications of Climate Change in Small Island and Littoral Developing Economies PDF • 0.87 MBThe present Issue Paper provides an overview of the challenges confronting Small Island and Littoral Developing Economies (SILDEs) in building their resilience to economic vulnerability and achieving sustainable development in the context of climate change. It also provides policy recommendations to guide SILDEs in enhancing economic resilience.
The author argues that SILDEs appear relatively better prepared to cope with the challenges of climate change than many larger developing countries. Nevertheless, they still face a number of critical challenges, particularly in the context of the structural and policy constraints imposed by their economic characteristics and capacity for resilience. The paper concludes that building that resilience to growth volatility and external shocks, including the impact of climate change, requires appropriate trade policies alongside measures to stabilise earnings and strategic import dependence. It is also crucial to develop the capacities of SILDEs to diversify production, enhance productivity and add value to exports. This requires indigenous capacities to innovate and develop new technologies; it also requires the absorption of adaptation and mitigation technologies.
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The term “diseconomies of scale” is used when a firm grows too large, and not when a firm is too small. It cannot therefore be used to refer to the disadvantages faced by small states. A better way to explain this disadvantages is as follows: “Small states face constraints in their ability to reap the benefits of economies of scale.” Robert Read used the term “diseconomies of scale” about 12 times in his paper and he has often used it in his publications. The paper, however, is very interesting and makes an important contribution to the literature.